The
Morningstar
US
Market
index
ended
the
week
3.06%
lower
with
large
technology
companies
leading
the
decline,
exemplified
by
the
14.5%
fall
in
the
price
of
Nvidia
NVDA.
Consequently,
Morningstar
Equity
Analysts
believe
that
the
US
equity
market
to
be
2%
undervalued.
Although
equities
are
undoubtedly
more
attractively
priced
now
than
they
were
a
few
weeks
ago,
prices
fluctuate
widely
around
fair
value
and
so
this
most
recent
changes
in
stock
prices
should
not
be
seen
as
indicative
of
the
need
to
make
adjustments
to
the
portfolio.
Looking
more
broadly
at
global
capital
markets,
most
equity
and
bond
markets
appear
to
offer
normal
returns
to
investors.
As
a
consequence,
investors
can
create
a
diversified
portfolio
without
sacrificing
expected
returns.
More
information
about
which
global
assets
are
currently
favoured
by
Morningstar’s
Investment
Management
team
can
be
found
in
the
recently
published
quarterly
convictions
document
here.
Will
Tech
Stocks
Lead
Earnings
Season?
As
we
move
deeper
into
the
US
corporate
reporting
season,
analysts
are
forecasting
a
bifurcated
outcome
with
the
largest
technology
companies
delivering
strong
profit
growth
while
the
remainder
of
the
market
is
expected
to
report
a
decline
in
profits
(Source:
FactSet).
Given
the
concentrated
nature
of
the
commonly
used
benchmark
indexes,
it
is
likely
that
the
contribution
of
the
technology
companies
will
lead
to
overall
profit
growth.
However,
this
concentration
also
creates
vulnerability
to
disappointment
among
investors
leading
to
concern
about
the
health
of
the
US
economy.
Given
the
likelihood
of
these
competing
narratives,
it
is
more
than
usually
necessary
to
focus
on
the
fundamental
characteristics
and
valuations
of
individual
businesses.
To
help
you
do
this,
Morningstar
has
a
dedicated
companies
earnings
page
which
you
can
access
here.
Why
Invest
in
Bonds?
As
expectations
of
interest
rate
cuts
continued
to
weaken
treasury
bonds
become
more
attractively
priced
as
both
a
source
of
returns
and
as
a
source
of
portfolio
diversification
in
the
event
of
weaker
than
expected
economic
growth.
However,
when
investing
in
bonds,
it
is
essential
to
know
why
you
own
them.
Investors
who
fail
to
specify
their
role
in
a
portfolio
run
the
risk
of
achieving
neither
the
returns
or
diversification
sort
as
they
do
not
properly
organise
the
remainder
of
the
portfolio
to
create
the
desired
outcome.
Beware,
Competing
Stories
Ahead!
The
week
ahead
is
likely
to
be
an
obstacle
course
for
investors
with
a
slew
of
economic
and
company
data
against
a
volatile
macroeconomic
backdrop.
Most
prominent
among
these
is
likely
to
be
the
latest
economic
growth
data
on
Thursday
and
the
latest
inflation
data
on
Friday.
Stronger-than-expected
outcomes
are
likely
to
fuel
speculation
that
interest
rate
cuts
will
be
further
delayed
and
cause
further
volatility
in
asset
prices.
With
so
much
news,
it
is
likely
that
every
movement
of
asset
prices
will
be
attributed
to
a
piece
of
data
to
create
a
narrative
among
investors.
Such
narratives
are
harmful
as
they
fool
us
into
believing
that
we
can
successfully
predict
near
term
movements
in
markets
and
encourage
us
to
chase
after
short
term
trading
profits
rather
than
accessing
the
rewards
that
good
businesses
provide
to
their
owners
over
the
long
term.
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